Florida foreclosure cases slow dramatically in court system — but it's only temporary

February 1, 2011|By Peter Franceschina, Sun Sentinel

The number of foreclosure cases introduced and cleared in Florida courts fell sharply in the last three months of 2010, with banks pulling back from vigorously pursuing thousands of cases as reports of problems with legal paperwork mounted, new state figures show.

Nearly half as many foreclosure cases were disposed in courts around the state from the previous quarter — 40,211 from October through December, down from 71,514 from July through September, according to the report released on Tuesday by state court administrators.

Even so, the backlog of cases pending in Florida courts continued to fall in the final quarter of the year.

The slowdown is a byproduct of temporary moratoriums on the filing of new cases imposed by banks late last year, which granted several months reprieve for struggling homeowners.

Banks put the moratoriums in place after the procedures used by mortgage service providers and foreclosure law firms came under intense criticism from foreclosure defense attorneys and activists, sparking a 50-state investigation by attorneys general into the foreclosure crisis.

In Broward County, the number of disposed cases dropped from 9,813 to 3,784 — a 62 percent drop. Palm Beach County saw the same percentage drop, from 10,236 cases disposed to 3,918.

In Orange and Osceola counties, which are counted together under the state court system, the number of finalized cases dipped 32 percent — from 7,824 cases to 5,327.

The numbers also show that very few of the foreclosure cases ever go to a full-blown trial; only 44 homeowners took their cases that far in the last six months of 2010.

"I don't think it is anything surprising. I think we were all under the impression in the last few months there was a decrease in both the number of filings and completions," said Palm Beach County Chief Circuit Judge Peter Blanc.

"Until we actually see numbers going up and fewer sales being cancelled, there is no reason to think that lull is over and it's picking up again. I do think the lull is temporary. My guess is they will pick up again."

As the number of new filings dropped, Florida courts were able to reduce the backlog of pending cases by more than 110,000, from 462,339 to 350,614 — a 24 percent decrease.

New foreclosure filings in South Florida dropped by as much as 50 percent toward the end of last year, according to RealtyTrac, an Irvine, Calif.-based foreclosure listing firm. For instance, Broward residential foreclosure filings fell from 1,686 in September to 600 in December, according to court administration figures. Experts say case filings also fell at the very end of the year as part of a typical holiday slowdown.

Lloyd McClendon, chief executive of Realauction.com, the Plantation company that handles the online foreclosure auctions in Broward, Orange and 22 other Florida counties, said the slowdown in new filings and finalized cases will eventually be reversed in coming months.

He said part of the slowdown is attributable to major clients, including Fannie Mae and Freddie Mac, pulling their cases from the Law Offices of David J. Stern, the Plantation law firm that once handled about 20 percent of all foreclosures in Florida and is now one of four Florida law firms under investigation by the Attorney General's Office. It takes time for new law firms to get up to speed on those cases and double-check paperwork, he said, adding that judges were putting those cases on hold.

But McClendon predicts new filings and dispositions are set to begin picking up.

"All indications and the inside word from within the industry is we are looking at a tidal wave of new filings and new schedulings in the next six months to come," he said. "The foreclosures are not going away. You can only keep them out of the system for a certain amount of time. Without an economic turnaround or something that allows these homeowners to make their mortgage payments, this is a temporary lull."

Fort Lauderdale real estate attorney Shari Olefson, author of "Foreclosure Nation: Mortgaging the American Dream," said she was struck by the large number of cases now classified as inactive. For various reasons, judges cannot move those 218,778 cases forward.

"That is really remarkable," she said. "It is huge."

The number of foreclosure cases involving homeowners who did not contest the case also dropped significantly in the final three months of last year.

From July to September, 71 percent of the statewide filings involved largely uncontested cases, according to the state report. In the final three months of the year, that number dropped to 46 percent, yet another indication that banks slowed their processing of foreclosures.